In this day and age of rising courier fees and insurance premiums, the cost of doing business seems to be escalating. But it's not all bad news.  Many ISOs are figuring out ways to minimize their cash costs.

A little less loading and a lot more cash

Gas prices are high, and interest rates are low. So why not take advantage of each? Many of our customers have moved their ATM replenishments from bi-weekly to monthly cash loads. This not only takes advantage of the historic low cost of funds, but avoids the rising cost of couriers and lowers correspondent bank charges.

Tom Stevenson

By loading more cash in the ATM for a longer period of time, the courier fees can be cut in half. Because of the lower costs and reduced paperwork, it makes an awful lot of sense.

Don't overdue it

Cash is cheap, but it's not free. Many ISOs are keeping an eye on their residual percentages. While you never want to see your ATM run out of cash and lose uptime, you don't want to pay interest on a lot of unused cash. 

Cash Connect has recently added residual percentages to the daily control files sent out to its customers and couriers to help them set residual targets and allow them to see trends in their ATMs' usage.

Many of our customers try to target their residuals between 20 percent to 30 percent. By keeping an eye on how much money is outstanding and adjusting loads accordingly, cash does not sit idle in a machine. This can also lower the loss exposure in the event of theft.

The source

Currency services are one of the most expensive components of cash management. Most funding activity is handled through a network of correspondent bank relationships. As a potential cost saving alternative, Cash Connect can use the Federal Reserve Bank (FRB) as a source of cash if the armored service company in use is approved and has regularly scheduled runs to the local FRB. 

Generally the cost of providing cash at an FRB branch can be cheaper than using a correspondent bank (about $20 per order regardless of the size); however, only one order can be placed for any given pick-up date.

Currency must also be ordered in "FED Bundles." FED Bundle amounts vary based on denomination. For example, if you regularly order twenties, then your minimum order must be $20,000 and the total order for any given pick-up date must be a multiple of $20,000.

FRB branches also do not offer same-day cash pick-up (emergency) service, so we recommend that customers using the FED speak with their armored carrier about maintaining an emergency reserve that Cash Connect can help manage.

To ensure timely and accurate crediting of residuals, returning cash must be processed through a correspondent bank since the FRB will not accept deposits that are less than a standard FED Bundle amount. 

If you have large currency orders for regularly scheduled replenishments and few emergency needs, then the FRB could be a more cost effective means of funding.

The author, Tom Stevenson is president of Cash Connect, one of the country's oldest and most well capitalized vault cash providers. Cash Connect, a division of WSFS Bank, provides more than $80 million in vault cash to more than 4,000 ATMs nationwide.